An Open Plea to the Scholars Who Have Declared Cryptocurrency Haram

When in the early 19th century the Ottoman governor of Egypt, Mehmet Ali Pasha, introduced water faucets at the Mehmet Ali Mosque in Cairo, the Egyptian ‘ulema debated whether this new fangled contraption was permissible in performing one’s ablutions before the prayer. The only scholars who ruled this innocent fixture to be permissible were from the Hanafi school, and hence taps came to be known as hanafiyah.

For centuries, the use of the printing press by Muslims in the Ottoman Empire was banned on penalty of death, perhaps partly because this form of mass communication clashed with the scholarly oral tradition of information dissemination. The first printing press in Istanbul allowed by Sultan Ahmet III in 1727 aroused so much suspicion from Ottoman scholars that it was subsequently shut down. This suicidal willingness to embrace ignorance would undoubtedly have been a contributory factor in the inevitable decline of the Ottoman Empire.

In the 19th century, the ‘ulema debated the minimum distance a telegraph wire could be sited near a mosque, concerned, they reasoned, that it conveyed the voice of Satan. In the early 20th century, Deobandi scholars banned the loudspeaker. In the 1980s, South African ‘ulema banned the television (irrespective of its content), and even suggested Mufti Taqi Usmani’s defence of television was akin to defending the consumption of alcohol.

Now we look back on these debates with detached amusement. Obviously our scholars couldn’t possibly make such mistakes today. They are much more sophisticated, in touch with their flock, connected by social media, tech savvy and scientifically aware, right? Well, not if you’ve been following the current debate on cryptocurrency.

In recent weeks, we’ve seen scholars as famous as Egypt’s Grand Mufti, Shaikh Shawki Allam, issuing a fatwa ruling against the trading of Bitcoin, and thus supporting an earlier ban by the Egyptian government. He claims to have met with economic experts prior to his ruling, though it is unclear who these are. Any government-appointed orthodox neoliberal economists – the priests of fiat - fear cryptocurrency because it robs them of their raison d’être, and their employers (the government) of autocratic financial control of the people.

The Grand Mufti’s stated reasons for the ban are devoid of logic: he says it allows for money laundering, fraud and the financing of terrorists, conveniently ignoring that the most prevalent currency in money laundering, fraud and terrorism is the US dollar.

He also says cryptocurrency has no set rules, making it a void contract, but I don’t recall Mrs May or Her Majesty’s Treasury issuing me with a rule book on using a 10 pound note – instead, the population of the United Kingdom place their faith in 10 pound notes being honoured in the exchange of real goods and services. That’s how currency works: through faith that it will be readily accepted. Except that in the case of fiat currency, the Bank of England can decide to reduce the value of my 10 pound note unilaterally by printing more notes, thus failing to honour a moral obligation to me, introducing gharar, and effectively voiding any contract between us (if such a thing actually existed). In fact, over the course of the 20th century, cash in the US saw a 96% real loss whilst the US equity markets delivered a 70,950% real return.

So if the eminent shaikh wants to ban Bitcoin for being a void contract, he’ll have to ban the entire world’s currencies as well.

A refutation of Shaikh Haitham al-Haddad’s fatwa

Shaikh Haitham al-Haddad who sits on the UK’s Islamic Sharia Council has recently published an online video declaring the use, mining, manufacture and exchange of cryptocurrency as haram. It is an extraordinary video, viewed at this time of writing by over 80,000 people. So extraordinary and misinformed, in fact, and with such a potentially serious impact, that I feel obliged to respond to each of his erroneous statements in turn. Wherever I quote a statement from him, it is quoted absolutely verbatim. If you don’t fancy reading a point by point refutation of his fatwa, feel free to skip to the alternative view and conclusion for the TLDR version, but please do read my plea to the scholars.

In his 16 minute diatribe, he begins by contending that “we don’t need to go into technical details of how to create a cryptocurrency… we don’t need to discuss these things”, before demonstrating basic factual errors in his understanding of economics and the monetary system, let alone cryptocurrency. So before we even begin to examine his rationale for the ban, may I suggest a technical understanding of a subject matter is an absolute prerequisite for expressing a legal opinion on that matter.

According to the shaikh, paper money is created by governments or central banks. This is wrong. In reality, using the UK as one example, 97% of all money in the economy is created by private banks as a consequence of the fractional reserve banking system. The shaikh is in good company: 71% of UK Members of Parliament also believe incorrectly that only the government has the power to create money.

Even if we argue it’s within the power of government to regulate the banks by (for example) setting tougher regulatory capital requirements when they want to constrict the money supply, in reality they almost never resort to this as the financial sector provides the government with tax revenues, and politicians stand a better chance of re-election by inflating a boom.

He claims that governments make “an undertaking to replace that paper money with something… legally if you take a dollar to the American government and tell them I want to buy something with this dollar, legally the American government will give you something.” He goes on to say if a shop refuses to accept your pounds in the UK in exchange for goods, “legally they have to do that otherwise you can go to the state or the Bank of England and they can force that.” Leaving aside this bizarre and incorrect explanation of legal enforcement of fiat currency, he implies that fiat currency is backed by something real. It is not, unless you believe that blind faith in the system is a form of real asset backing.

Perhaps the shaikh has confused the Bank of England’s narrow and technical definition of “legal tender”, meaning the settlement of debts. The Bank of England does explicitly state that “…shops are not obliged to accept legal tender. If you hand over a £50 note to pay for a banana in your local grocery store, the staff are within their rights to choose not to accept it…. it’s a matter of discretion.”

In contrast to his assertion that fiat is backed by something real (a false statement), he says cryptocurrency is not backed by anything real, nor is there a government undertaking “whereby those who produce the cryptocurrencies are obliged by enforceable law to give you something as an exchange for cryptocurrency”. There is so much wrong in that one statement, it’s hard to know where to begin. I suspect he doesn’t realise that at the inception of a new cryptocurrency, the “producer” (by which I assume he means the writer of the algorithm) is no longer a part of the process and has no ability to manipulate. He is not “obliged” to give you anything. It’s like a new set of physical laws have been set in motion, and the galaxies, stars and planets in that universe are left to interact according to the set laws which are made known to everyone. The writer of those laws can’t subsequently change them. He is not the central banker.

The shaikh moves on to discuss the volatility of the price of Bitcoin. “Prices are… jumping up and down based on demand and supply, not based on anything else.” Supply and demand are exactly what determine the price of fiat currencies in the markets. That supply and demand varies as a function of external variables, like governments raising or lowering interest rates, or geopolitical considerations. That is how the price of the USD and GBP are determined, and in this respect, Bitcoin and Ethereum are no different. What he means to say, perhaps, is that cryptocurrencies are currently more volatile than fiat, and therefore perhaps may be deemed more risky to trade. That in itself is not a reason to declare them haram. Otherwise he would presumably also declare shares in halal companies to be haram, especially early stage ones with greater risk.

The shaikh sets out what he believes to be fundamental differences between fiat and crypto:

Paper money is issued by the state and central banks (a false statement), whilst crypto is issued by “either known people or unknown people”, meaning the private sector.

The origin of paper money is gold (until 1971), but crypto has no gold backing.

No-one is under legal obligation to exchange crypto for property, whilst paper money is backed by an undertaking by states and central banks.

1 and 3 we have already dealt with. The second assertion, that crypto has no gold backing leads me first to ask the question where in Shari’a does it say that money as a measure of value must be backed by gold, and gold alone? Answer: it doesn’t, the Quran and Sunnah have not defined currency to the nth degree. Instead, it is left to the understanding and custom of the people. That said, I don’t disagree that the majority of classical jurists require something of intrinsic value but that is a different point.

Perhaps even more importantly, the shaikh doesn’t realise that Bitcoin has the characteristics of gold in that it is inflation proof, decentralised, divisible, scarce and finite. It has several additional qualities that gold doesn’t have, like utility as a currency (exponentially improving all the time), anonymity, speed of transfer, non-counterfeitable through the genius of the distributed ledger, more resistant to theft (if stored correctly but this remains open to debate), open source and durable. It is Gold 2.0. Incidentally, fiat currencies have none of these characteristics, other than they are accepted as currencies. But that’s like saying the horse is a mode of transport just like the jet airplane (another innovation the scholars once tried to ban).

So, taking Bitcoin as our specific example of cryptocurrency, if Bitcoin has all the qualities of gold and more, does that not give it intrinsic value that the scholars seek? Or have we already decided, like the banning of the printing press, that any new technology that improves on an older one must by necessity be the work of the Devil and we need not do any further research on it?

Let’s go back to Shaikh Haitham’s fatwa. He spends the next few minutes describing the Shari’a concept of exchanging commodities hand to hand, as per the famous hadith. If you are reading this article on IslamicBanker.com, no doubt you already know this. Gold for gold, silver for silver etc. And indeed, I commend Shaikh Haitham for reminding us how miraculous this hadith is because it does indeed, as he says, establish a “correct economy”. It immediately proscribes the fraud that is the fractional reserve banking system. The shaikh describes the act of substituting paper (IOUs) for the gold that may be exchanged as currency, and thus provides a rudimentary explanation of the banking system, including the ability to multiply deposits to create new money.

This is wonderful, except it doesn’t support his argument. Quite the opposite in fact: Bitcoin cannot be printed, it cannot be created from thin air, it is finitely bound by its algorithm and secured by the blockchain, and, most importantly for the purpose of this specific point, it cuts out the banking system. Imagine a world in which the only currency is Bitcoin. Since the banks cannot create Bitcoin (they would have to mine it or earn it), they cannot issue new Bitcoin to borrowers. And presto: we would have a deleveraged world economy. So the shaikh’s reference to the hadith is an own goal, because it suggests Bitcoin could be a solution to a riba-free world. I am sure that is not what he intended to say.

The shaikh then references an article he has written, saying “If Muslim countries they want to be independent in the economy, they should try their best – even the paper money, OK? – they should avoid it and instead of the paper money, or selling things for paper money to other countries, yeah?, in particular to other countries, they should partake, OK? In order to gain physical properties in their hands.” I thought twice about quoting this particular statement verbatim as my intention is not to belittle, but I think it is important because this statement is indicative of a general rambling nature to the fatwa which suggests a confusion in matters of commerce, finance, economics and technology.

The next point – I know, this is a long one, so don’t be shy to skip to the conclusion as this subject is of such profound importance to us that I don’t want to lose you halfway through! - he asks what if crypto becomes a replacement for paper money, and answers that governments will have an undertaking to replace digital money for property. This is nonsense. Since they don’t do that today, there is no reason to believe this would be the case in the future. Also certain cryptocurrencies like Bitcoin have been established to be a non-manipulatable, finitely bound, decentralised, independent monetary system. Governments will have less of a part to play if crypto replaces fiat. Perhaps they might explicitly deem it legal and acceptable, but then again if millions or billions of people are already using a particular currency, this is a moot point as there’s not much a government can do to prevent billions of people.

The second answer the shaikh gives to the scenario that crypto replaces fiat is that suddenly “their prices will be regulated”. Again, this displays a complete lack of understanding of the monetary system and financial markets. He uses the argument that Bitcoin has grown exponentially in price, but as we know, this is a function of its evolutionary stage. It is in the process of being understood and adopted by merchants, by the people, even by governments. It has not been fully mined yet. It’s like the internet in the early 1990s. Of course its price is growing rapidly, of course it’s volatile. Just because a government adopts a currency doesn’t mean the government is in control of all macroeconomic variables that affect its price. It only controls the price of fiat money by manipulating it by printing more! Quantitative easing has substantially benefited one class of society: the 1%. The shaikh’s answer suggests he is content for monetary control to be by the elite for the elite, but surely he does not mean this? The Shari’a does not prefer tyranny and injustice to equality and social inclusion.

If what he is actually implying is that Bitcoin is not ready to be a currency yet because the price is not yet stable, then fair enough, he may have a point. But unless we pass through this transitory phase, we will never get to the stability phase and the benefits will never be realised. It’s like saying we should never invest in a start-up company.

Rather strangely, he concludes by saying that if governments issue cryptocurrency, it will just be a replacement for paper money and therefore acceptable (presumably because of his specious argument that he believes it will be backed by something). Instead of a dollar, he says, it will be an e-dollar, instead of a pound, an e-pound. Perhaps he doesn’t realise that most of the dollars and pounds in the economy are in fact digital already, and not paper.

Shaikh Haitham is highly respected amongst many British Muslims who take note of his many comments on a wide variety of social issues. Sadly this latest fatwa is rambling, confused and fundamentally inaccurate. I believe this type of scholarship can cause serious harm to the ummah.

The alternative view

I have heard and read similar examples of declarations of impermissibility from less well known scholars, all of them based on little more than gut feel and also lacking technical expertise.

However, I am heartened to note a small handful of scholars – those expertly qualified in fiqh al mu’amalat as well as banking law, finance and economics – who are starting to put their heads above the parapet and offer a more considered and competent assessment of this new technology.

The UK scholar, Mufti Faraz Adam, wrote a lengthy and erudite paper on Bitcoin in August 2017 in which he concluded that Bitcoin does seem to have the characteristics of maal (wealth) with taqawwum (legal value). However, he did not believe that it possessed thamaniyyah (currency attributes). He also reasoned that Bitcoin fell short of fulfilling the principles of preservation of wealth in Shari’a, and did not serve the real economy nor promoted real growth of an economy. At that time (August of last year), he concluded that Bitcoin was an investment for individual profit maximisation, and that returns would be lawful and Shari’a compliant. He also cleverly left the way open for globally recognised industry bodies and experts to offer further opinions based on their expertise. He disclaimed that his research paper was in any way a final statement or fatwa.

Wonderful. All the hallmarks of a scholarly, thoughtful, reasoned and qualified opinion, and without making it the definitive final word. What I find particularly interesting is that he followed up five months later in January 2018 as part of his ongoing research, and in consultation with other experts. In that follow up, he summarised three fiqh interpretations of Bitcoin as follows:

Bitcoin is not maal nor currency

Bitcoin is maal and not a currency

Bitcoin is both maal and currency

Proponents of the first view (like Shaikh Haitham) conclude that Bitcoin is not Shari’a compliant in any way for any usage. Mufti Faraz argues that this interpretation falls short of reality for many of the reasons that I have already pointed out. He says that Bitcoins do exist as something “real”, have form in the guise of digits, and can be accessed, converted or exchanged when required. “To simply negate the existence of Bitcoin is illogical,” he concludes.

Scholars of the second view argue that Bitcoins do exist, but are crypto-assets rather than currency – in other words it is Shari’a compliant to own them and become wealthy from them but not to use them as a medium of exchange. These scholars say that Bitcoin does not have ta’amul (wide usage) and istilah (social concurrence) as currencies. It can be argued, however, that this is but a transitory phase, and both qualities are improving all the time. Mufti Faraz also argues that no-one would trade Bitcoin if there was no inclination to use and derive its ultimate benefit: that of a currency. So he concludes it must be a medium of exchange and therefore rejects the second interpretation.

Scholars advocating the third view argue that Bitcoin was established as a peer to peer payment system and therefore established and used as currencies, as a result of istilah (social concurrence) from the outset. For something to be considered maal, it must have desirability and storability. We have already seen why a decentralised independent monetary system has desirability, and we understand that it is storable through the distributed ledger. They therefore have taqawwum (legal value).

Here’s the interesting bit: Mufti Faraz’s view on the currency attributes (thamaniyyah) of Bitcoin has evolved. He now understands the technology and the concept better, and argues it provides a system for the currency and as a medium of exchange. The value of Bitcoin “is envisaged by the people as they purchase, sell, accept and exchange the form of Bitcoins for the underpinning notional value”.

Mufti Faraz then makes a profound observation that many other scholars would do well to reflect on:

“The philosophy of value has to also be reconsidered. The technological developments in the last century have reshaped and redefined our way of life. For example, value is represented today by mere digits on a bank app which are backed by the government. Society gives value to digits displayed in their bank balances because of the system and acceptability of these digits among people. If an alternative system was created which gave a certain degree of trust, security, ease of use and similar features, why can’t the digits on that system be considered to be digits representing value? A system which is acceptable among people is sufficient to establish a currency in Shari’a.” Thus, he concludes, “…the most plausible takyif seems to be that Bitcoin is a currency.”

Conclusion

The Egyptian-American scholar, Professor Mahmoud El-Gamal, once told me that if Islam is to remain alive and healthy, it needs to hold its own in an increasingly sophisticated and polarised world. “You have no choice but to keep up. If the other side produces better weapons than you, then it would be lunacy to let others have a competitive advantage over you.”

We are the same stage in the evolution of cryptocurrencies that the internet was in the early 1990s. Some could see no future or practical application for the web. It was clunky, slow, inefficient and expensive. Now it is ubiquitous and we cannot live without it.

Ceding control of the money supply to governments and banks cedes our freedom. We don’t need to look further back than 2008 to know that giving governments responsibility for monetary stability has historically been a disaster.

A land grab is currently taking place, perhaps the greatest transfer of wealth in human history. When the nebulae disperse and the galaxies in this new universe coalesce, who will be left with power and influence, and who will be destitute and bereft? Whilst non-Muslims develop an independent decentralised monetary system that in the process could erase the curse of fractional reserve banking and riba, the Muslim ummah stands by idly waiting on our scholars, surrendering our intellect and decision making skills to dogma and ignorance.

Failing to adapt to the world around us represents an existential threat to Muslims. A blanket rejection of new technologies by the ‘ulema has kept the ummah in ignorance and poverty since the passing of the great scholars of Baghdad and Cordoba. Please allow us to advance and perhaps we can relive that Golden Age.

We live in an age in which knowledge is so specialised that several years of study in one discipline still only scratches the surface of that specialism. Scholars opining on matters of science, technology, medicine and other specialist disciplines must themselves be qualified in those disciplines, and work in conjunction with recognised panels of experts before reaching considered opinions.

Issuing fatawa in a vacuum is a serious mistake. A plea from me, therefore, to the scholars: please, remain silent on this topic unless you are qualified to reach an expert conclusion.

Absolutely essential reading. Crypto currencies are not well understood. They may prove a way out of our slavery to Fiat money. We need more research and commentary like this. We also need Shariah scholars to execute their work in a more scholarly fashion

A much-needed dose of clarity!The technology is still new and there are challenges, which is expected, but cryptocurrencies and blockchain are an opportunity for a more decentralised and fairer world. They can do for wealth and value, what the internet did for information.

I like you to mention other cryptocurrencies. One particularly is finite and gets destroyed after a certain number of transactions.I'm guessing we will end up with a criterion. SOME will become permissible and some won't. (edited)

A very well researched article, thank you. I cannot agree more with this statement: "Scholars opining on matters of science, technology, medicine and other specialist disciplines must themselves be qualified in those disciplines, and work in conjunction with recognised panels of experts before reaching considered opinions". Need this approach with any fatawa.

Good write up. Further research need to be conducted on this matter by people who undetstands the concept. If the write up was more assertive, the messege could have been more appteciated and formed a basis for further discussion not rejoinders to the writer.

Thank you for this well written and thoughtful piece. Personally, I would not go anywhere near any cryptocurrency regardless of whether they are Shari'a compliant or not. But for those of us who actively promote Islamic Financial services, clarity and availability of digital finance are essential.

It has been disappointing to me that so many knowledgeable and respected scholars have responded to this issue with an obvious lack of knowledge on the subject. There is a well known principle of fiqh: “The ruling on something is dependent on its conceptualization”, i.e. you cannot render a ruling on something without first fully understanding the concept, or as Allah, subhanahu wa ta'ala, said, “Know there is none (worthy) of worship except Allah then seek His forgiveness.”(Muhammad:19), so Allah commands us with knowledge first and foremost before action.

There is always going to be a discourse and a differing of opinions in the areas of fiqh, and this is something that is welcomed and healthy for Islamic scholarship, but these opinions must be based on sound knowledge and principles, not emotions or knee-jerk reactions.

I agree with Harris that scholars should abstain from issuing fatwas on subjects they apparently know little about. In this instance, if scholars are concerned about moneylaundering, fraud, and terrorist financing (as they should be), they should be issuing fatwas against these activities. Irfan spends some time (correctly, in my view) refuting scholar al-Haddad's fatwa against Bitcoin. I cannot share the respect some British muslims apparently have for the thought of al-Haddad, given his views on women, Jews, and homosexuals, and his rambling opinions on cryptocurrencies do not redeem him. (edited)

I have added some thoughts on cryptocurrencies in addition to my earlier comment. The disarray and divergence of opinion within the Islamic scholarly community on the subject of cryptocurrencies is disconcerting. I think bitcoin, distributed ledger systems, and in fact much of modern finance is so far removed from the situation at the time of the prophet that it is futile to attempt a literalist approach from the fundamental texts and the opinions of scholars and fiqh schools. A modernist approach (Fazlur Rahman and Abdullah Saeed) is much better - attempt to determine the ethical content of the prophet's words and deeds, and apply that to the modern context. This would allow, as Irfan urges, for Islamic scholarship to become more accepting, innovative, and relevant, focus scholarship on ethical issues, and leave little room for fatwas on technical issues like cryptocurrencies.I don't share Irfan' distrust of the banking system - while it certainly has its blemishes, its the best we've come up with over the last few hundred years. But cryptocurrencies do pose a real challenge to policymakers. Irfan likes the fact that there is a finite cap on Bitcoin mining and that it is out of the control of governments - true - but is it better for it to be controlled by the rapidly consolidating bitcoin mining industry (mafia may be a more appropriate word)? Better to support strict inflation targeting and central bank independence from governments. The cap will have to be raised to give miners an incentive - a counterpart to the seignorage enjoyed now by central banks and governments. While the distributed ledger sysem underlying cryptocurrencies is a promising innovation, the security aspect of cryptocurrencies is overblown. While the blocks of the ledger appear to be secure, millions of dollars worth of cryptocurrencies have been stolen, and we can just look on the net to find many scams and strategies to steal and defraud - stealing one's private Bitcoin wallet key, or hacking into exchanges or bitcoin depositories like Coinbase. Its a jungle right now. We will need to bring in the accountants, auditors, risk managers, IT security specialists, monetary policy specialists and regulators to this sector of the financial world, as we do in the banking world. This article discusses the consolidating industrial structure of bitcoin mining: https://spectrum.ieee.org/computing/netw....

Miners are paid for updating record that is alright but that in itself does not need solving complex mathematical problems and rewarding miners for it is same as rewarding waste as it does not serve any significant purpose. The process of rewarding is getting increasingly complex and therefore a few years later the number of miners will decrease and chances of manipulation of the self-governing mechanism will become significant.Dinar and Dirham provide highest level of price stability as these have constant intrinsic utility and most stable purchasing power. Therefore their use as store of value, as standard of deferred payment and as unit of account leads to efficiency and justice. This also leads these to perform the most essential function of money i.e., determination of just and efficient prices in as much as there does not exist any other alternative for the process of just determination of prices by the market. However in case of bit coins there does in not exist any mechanism to keep value stable therefore it is neither a store of value nor a unit of account nor it can set or determine just and efficient prices.Considering that total supply of bit coins is capped at 21 million, assuming that these becomes widely used and accepted and maintains its share in economy it will have a real appreciation rate equal to growth rate of economy. Thus any loan or capital accounted in terms of bitcoins will have a real appreciation rate equal to growth rate of economy that is simply exploitative, unjust and grossly inefficient and cannot be acceptable to free and informed people.Our scholars accepted equivalence between prevailing paper currency and the two cashes (Dinar and Dirham) as firstly they had no other alternative solution for the problem they were confronted with and secondly the economic and technical experts assisting them have advised them on the issue of quantity and nature of prevailing paper currency. Most of our scholars especially Ulema continue to think that the said advice that led them to hold prevailing paper currency as equivalent to the two cashes is true. It is true that regarding lack of similarity between Dinar and prevailing paper currency what Mr. Harish Irfan says is mostly correct and what Shaikh Haitham al-Haddad says is mostly incorrect but even then using terminology of Mr. Harish Irfan his being right only leads to a self goal in as much as that while it does demolish the bases on that our scholars accepted prevailing paper currency as equivalent to gold coins, it only strengthens the argument against permissibility of bitcoins in that much of the support it has is based on some similarity between it and prevailing paper currency.Hifzur Rab

This is an excellent article and it sums the debate very well. I agree with it on the conceptualization of Bitcoin as a Shariah compliant instrument as the complaints that some raised are not really Shariah based but confuse the traditional views on what money is with new innovations. In Money & Banking courses, as I taught it, we usually start by reminding students that humans used all sorts of objects as money, like sea shells...etc. However, speculative transaction in crypto currency should be discouraged on moral grounds and the higher objectives of shariah. But this challenge will probably disappear over time as crypto currencies become common place. (edited)

WRT the benefits of cryptocurrencies which the article raises;A) "Ceding control of the money supply to governments and banks cedes our freedom. We don’t need to look further back than 2008 to know that giving governments responsibility for monetary stability has historically been a disaster." As a macro economists, this view in turn is both naive and not totally accurate given the independent or semi independent status of central banks in advanced countries and the general focus on maintaining low inflation rates. Thomas Friedman, father of the monetarist school (champion of market economy and conservative policies) would be a great fan of CCs because it fulfills his most important recommendation, fixed money supply rate (don't use monetary policy to manage the economy). So, unless you are a diehard monetarist and pro conservative economic policies, It is critical to realize the importance of a flexible monetary policy in responding to various economic conditions to achieve a greater public good for the society like improving growth and employment.

On the 2008 crisis, from 10 years in banking and living through 2008 and watching my bank collapse, the financial collapse happened not mainly because of direct government policies but rather due to rapid development of financial instruments like REITs and other derivatives, pushing borrowers to obtain unsuitable financial products, like reverse mortgages, lax lending standards, outdated risk management standards for individuals and banks, faulty risk models, and the availability of cheap credits. (edited)

B) "the process could erase the curse of fractional reserve banking and riba". 1st) ending the fractional reserve is a very radical step that will create a massive economic crisis and contraction of economic activities, so, I am not sure it makes sense to advocate its demise before fully assessing the ramifications! 2nd) With some imagination, the financial system can adapt cryptocurrencies to lending and borrowing and hence recreate the fractional reserve on the basis of cryptocurrency wallets/volts/banks...etc. With lending, riba, can emerge again. (edited)

On investing in Cryptocurrencies (CC), this is still a new technology as we all know. So, Bitcoin and other CC might soon become outdated with the emergence of much better CC with better features that takes over the market share of Bitcoin today (it helps to think of currency market share through models of behavioral network externalities with excess inertia and momentum phases). Network modeling inform us that the increase/collapse in the value of currencies can be very rapid leading to both big losses or gains, as witnessed in the current value fluctuations of Bitcoin. Therefore, invest in today's CC with a clear understanding of the competitive environment and their ability to compete and enhance its features. (edited)

Headline of a story on Reuters (March 7): The CEO of hacked bitcoin exchange Mt Gox said that discovering he had lost £4.5 billion worth of customer money "felt like I was about to die."Karpeles told the BBC that running the bitcoin exchange was a "daily nightmare" and a "constant race."Karpeles has been released on bail from a prison in Japan.

Those advocates of cryptocurrencies who think we can do away with regulators, auditors, and tough rigorous surveillance by the authorities had better think again. (edited)